Wall Street Journal on Top Prosecutor for Tammany Hall II Corruption Probe

Garcia Considers Law-Firm Post
The Wall Street Journal by Amir Efrati - November 10, 2008

Michael Garcia, the U.S. attorney for the Southern District of New York, in Manhattan, could resign his position as early as this week and is likely to join a private law firm in New York, say people close to his office. Under his three-year leadership, Mr. Garcia's office became well known for the successful prosecution of public-corruption and terrorism-related cases. At the same time, the office also lost some of the luster it once had as the top Wall Street cop, stumbling in some high-profile cases and losing turf battles with other prosecutors' offices. The next U.S. attorney may be expected to step up the office's pursuit of corporate wrongdoing. Public pressure is growing to increase regulation of financial institutions and find people who may have contributed to the financial crisis. Names that have surfaced so far as possible candidates for the job include Lev Dassin, the current No. 2 prosecutor at the Southern District, who would take over for Mr. Garcia until the Obama administration makes an appointment next year; Mark Pomerantz, a prominent white-collar defense lawyer in New York and a former Southern District prosecutor; and Preet Bharara, a former Southern District prosecutor currently serving as Sen. Chuck Schumer's chief counsel on the U.S. Senate Judiciary Committee. Messrs. Garcia, Dassin, Pomerantz and Bharara declined to comment.

The Southern District has suffered some setbacks of late. Mr. Garcia's securities-fraud unit recently lost the chance to investigate mortgage investors Fannie Mae and Freddie Mac after the Justice Department gave the cases to federal prosecutors in Washington and Virginia, according to a person familiar with the matter. (Spokeswomen for the Southern District and for the Justice Department in Washington declined to comment.) In recent years, the office bungled two high-profile tax- and securities-fraud prosecutions, though both were initiated before Mr. Garcia arrived. And federal prosecutors in Brooklyn, rather than Manhattan, recently brought the first two securities-fraud prosecutions stemming from the credit crisis, a development viewed by some as a blow to Mr. Garcia's office. However, the Southern District still consistently brings big white-collar cases. Under Mr. Garcia, Manhattan prosecutors obtained guilty pleas in a fraud case against former executives of collapsed financial firm Refco Inc., and successfully prosecuted both large-scale insider trading at Wall Street firms and cases of stock-option backdating. The office also successfully prosecuted corruption cases stemming from the United Nations oil-for-food scandal. Last week, the office decided not to bring charges against former New York Gov. Eliot Spitzer, though its prosecution of organizers of a prostitution ring that counted Mr. Spitzer as a client helped prompt Mr. Spitzer to resign earlier this year. Since the credit crisis worsened, the Southern District has been active. It is investigating possible wrongdoing by executives at Countrywide Financial Corp. and at Lehman Brothers Holdings Inc. And last month, Mr. Garcia took the unusual step of confirming a report about his office's joint investigation -- with the New York attorney general's office -- of potentially improper trading in the credit-default swap market. Mr. Garcia has been in advanced talks to join the New York office of law firm Kirkland & Ellis. A spokesman for the firm declined to comment. Write to Amir Efrati at amir.efrati@wsj.com